NDS Revenue Drops 11%

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NDS Group reported an 11% decline in revenue for the quarter ended Sept. 30 compared with the year-ago period, citing volume discounts to several large conditional-access customers and currency fluctuations.

Net income for the company, a majority owned subsidiary of News Corp., dropped 71% to $13.4 million compared with $46.3 million the year prior.

"NDS's results this quarter reflect lower revenue from several large customers whose [conditional access] contracts have been renewed with certain volume discounts and new pricing to reflect different smart card change-over policies, as well as smart card recycling by certain customers," chairman and CEO Abe Peled said in a statement.

NDS's major customers include DirecTV, the U.K.'s BSkyB, Sky Italia and Cablevision Systems. 

Peled said the results were in line with the company's previous guidance.

"At this point, the worldwide economic uncertainty has not been reflected in our operational results or outlook; however, we remain cautious and are monitoring the field results closely," he said. "Our project pipeline remains strong, and we remain focused on helping our customers compete effectively." 

Revenue from NDS's conditional access business decreased by 19% during the quarter compared with the year-ago period. The company said that was principally due to recognition for the three months ended Sept. 30, 2007, of a portion of security services revenue that was previously deferred. That was partially offset by an increased volume of smart cards delivered and subscriber growth of customers in the quarter ended Sept. 30, 2008. 

In August, NDS agreed to go private in a deal with News Corp. and two entities formed by investment firm Permira Advisers LLP. The transaction would give the Permira companies 51% ownership of NDS, while News Corp. would own 49%.

NDS disclosed that it spent $3.1 million in legal and professional fees in the quarter associated with the transaction.